Question

Waupaca Company establishes a $410 petty cash fund on September 9. On September 30, the fund shows $120 in cash along with receipts for the following expenditures: transportation costs of merchandise purchased, $59; postage expenses, $74; and miscellaneous expenses, $144. The petty cashier could not account for a $13 shortage in the fund. The company uses the perpetual system in accounting for merchandise inventory.
Prepare (1) the September 9 entry to establish the fund, (2) the September 30 entry to reimburse the fund, and (3) an October 1 entry to increase the fund to $440.
1-Prepare the journal entry to establish the Petty Cash fund.
2-Record the reimbursement of the petty cash fund.
3-Record the increase of the petty cash fund.
Date General Journal Debit Credit
Oct 01

Answer 1

Answer:

1. Sep 09

Dr Petty cash $410

Cr Cash $410

2. Sep 30

Dr Merchandise inventory $59

Dr Postage expense $74

Dr Miscellaneous expenses $144

Dr Cash short and over $13

Cr Cash $290

3. Oct 01

Dr Petty cash $30

Cr Cash $30

Explanation:

1-Preparation of the journal entry to establish the Petty Cash fund

Sep 09

Dr Petty cash $410

Cr Cash $410

2- Preparation of the journal entry to Record the reimbursement of the petty cash fund.

Sep 30

Dr Merchandise inventory $59

Dr Postage expense $74

Dr Miscellaneous expenses $144

Dr Cash short and over $13

Cr Cash $290

($59+$74+144+$13)

3- Preparation of the journal entry to Record the increase of the petty cash fund

Oct 01

Dr Petty cash $30

Cr Cash $30

($410-$440)